How did Mr. Pham Cong Danh withdraw thousands of billions from VNCB?

The former chairman of Vietnam Construction Bank borrowed legal entities from many companies, indirectly withdrawing money from VNCB.

Regarding the wrongdoings of Mr. Pham Cong Danh (former Chairman of Vietnam Construction Bank - VNCB) in causing a loss of 6,000 billion VND (out of a total of 15,000 billion VND),The Department of Investigation Police on Economic Crimes and Corruption (C46 - Ministry of Public Security) has just arrested Mr. Tram Be (58 years old, former Vice Chairman of the Board of Directors and Chairman of the Board of Credit of Sacombank) and15 people are former officials of TPBank, BIDV, directors of companies...on the act of intentionally violating state regulations on economic management causing serious consequences.

At least nine others are being investigated on the same charges.

In addition to borrowing money through the relationship with Mr. Tram Beof Sacombank, kIn May 2013, to deal with the shortage in the restructuring process of Vietnam Construction Bank - VNCB, Mr. Danh continued to direct his subordinates to find ways to withdraw money from this bank and transfer it to Thien Thanh Group and the company he established, to spend on customer care and increase investment capital.

Because these companies had already borrowed money from the bank and could not borrow more, Mr. Danh directed VNCB General Director - Phan Thanh Mai to meet Nguyen Viet Ha (General Director of Loc Viet Fund Management Joint Stock Company) to borrow the legal entities of the companies to borrow money from TPBank. The borrowed money was used to buy bonds of Thien Thanh Group to legalize the transfer of money to Mr. Danh (although this group did not meet the conditions to issue bonds) and VNCB would guarantee the loans.

In addition to using his own companies, Mr. Ha repeatedly discussed with Dang Thi Bich Thuy and Dinh Viet Cuong (Director and Deputy Director of TPBank's Corporate Customer Division) to find businesses to help Mr. Danh borrow money from TPBank, which will be guaranteed by VNCB with deposits at this bank.

Mr. Ha introduced 5 companies, Thuy and Cuong introduced 6 companies to borrow money from TPBank. Among them, there were companies that Thuy directed employees to be the directors or employees' relatives to be the directors.

Mr. Danh caused a total loss of 15,000 billion VND. Photo: Hai Duyen.

The investigation agency determined that Cuong and Thuy then directed their subordinates, TPBank's customer service specialists, to receive legal documents from 11 companies applying for loans and transfer them to VNCB to carry out procedures to guarantee bond purchases. When reviewing the documents, TPBank's business department leaders and staff did not evaluate the financial capacity but only evaluated the business plan as effective and having collateral.

Without considering the legality of the bonds issued by Thien Thanh Group, TPBank's Credit Committee still agreed to approve loans of more than VND1,666 billion to 11 companies. The sales, mortgage and guarantee contracts were all signed and stamped by VNCB, and TPBank staff notified the representatives of the companies to come and sign. The representatives of these companies had absolutely no connection or negotiation with VNCB.

To secure these loans, VNCB had to transfer more than VND1,700 billion to TPBank. After TPBank disbursed the money, these 11 companies transferred VND1,600 billion to the accounts of Thien Thanh Group and Trung Dung Company, and Mr. Danh directed them to withdraw it for use. The remaining VND66 billion was used by Loc Viet Fund Management Company.

TPBank then handled VNCB's collateral assets to recover all the debts owed to 11 lending companies, so there was no damage. However, the actions of TPBank's leaders and sales staff were determined by the investigation agency to be illegal, indirectly helping Mr. Danh withdraw money from VNCB and causing irrecoverable damage of VND 1,740 billion.

Also during this time, Mr. Danh met with BIDV leaders including Mr. Doan Anh Sang and Mr. Tran Luc Lang (two deputy general directors in charge of the corporate customer department and risk management department) in Hanoi to discuss borrowing money to increase charter capital. Mr. Danh gave the reason that "there are 12 enterprises that are customers of VNCB that want to borrow capital to trade in construction materials". Because VNCB was not able to lend during the restructuring period, he introduced them to BIDV.

In fact, these are companies set up by Mr. Danh, hiring his employees to act as directors. Because Mr. Danh committed to guarantee the loans with money deposited by VNCB at this bank, BIDV's leaders approved the loan policy. Mr. Danh then directed his subordinates to each do a step, creating fake loan documents including: financial reports, business plans, construction material purchase contracts, loan applications... to submit to BIDV.

Although the companies were not operating, according to Danh's instructions, the loan documents showed that each company had from 35 to 70 main employees who were signing construction contracts worth over 1,000 billion VND...

Trusting Mr. Danh, BIDV leaders agreed to lend and issued a policy of disbursing first and supplementing documents later. However, after disbursing VND4,700 billion, BIDV requested additional documents and invoices proving the purchase and sale activities to check the use of capital, but these companies did not provide them. Therefore, BIDV recovered the debt ahead of schedule.

Mr. Sang and BIDV leaders stated that they did not know, had no relationship with or met the directors of the 12 companies that took out loans. They only knew that the companies were customers of VNCB and introduced them. The reports and approval decisions of the headquarters were only approvals in principle, but also assigned the authority to the branches to receive and lend according to the process. The directors and employees of the branches said that the disbursement was due to the introduction letter from VNCB, the policy of the headquarters... and at the same time, the assets secured 100% of the loan so the loan was granted.

The investigation agency determined that BIDV individuals had committed violations in lending to Mr. Danh's companies, only checking and evaluating the effectiveness of the business plan based on fake documents created by Mr. Danh and his accomplices. The violations of BIDV leaders and employees did not cause damage to the bank, but indirectly helped Danh withdraw money from VNCB and cause a loss of more than VND2,550 billion.

According to VNE